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>> that a reduced delinquency rate is being passed to subprime borrowers as savings in reduced interest rates What are the barriers to entry for subprime auto

>> that a reduced delinquency rate is being passed to subprime borrowers as savings in reduced interest rates What are the barriers to entry for subprime auto lending? Those lenders are ubiquitous in the inner city, so I don't think there is much of a barrier to entry, maybe I'm missing something. If there is no barrier to entry, and reduced delinquency rates aren't being used to reduce interest rates, then that is a problem poor people have that I could help solve by getting rich. In my experience, those type of problems do not exist. For the first assertion, there are some numbers in the article, but beyond that, why would lenders pay for this if it didn't reduce delinquency rates? It would be easy to run the numbers to see if it was worth the price, even a mom and pop shop could A/B test it.

jonnycomputer 6y ago
Having a low barrier to entry is not sufficient for there to be real competition between those in the market. Why? Well, for one thing, subprime borrowers buying cars are probably limited in their ability to shop around. If you cannot do price comparison, then there really is no effect on prices of competition. Firms will compete in other ways, for example, by making themselves more accessible, or limiting access to competitors. Look, the likely thing that is happening is they get a ride to the nearest local dealership, and take whatever loan package they're offering. And if they are doing that, its probably some shady corner dealership anyway.
- rufus_foreman 6y ago
  >> Having a low barrier to entry is not sufficient for there to be real competition between those in the market. Why? Well, for one thing, subprime borrowers buying cars are probably limited in their ability to shop around Everybody's got a phone. And everybody can ask around, places get reputations. If you offer significantly better rates than the competition, you will get a good reputation. >> Look, the likely thing that is happening is they get a ride to the nearest local dealership, and take whatever loan package they're offering That's not what I did when I was poor, and it isn't what the other poor people I knew did.

jonnycomputer 6y ago

Having a low barrier to entry is not sufficient for there to be real competition between those in the market. Why? Well, for one thing, subprime borrowers buying cars are probably limited in their ability to shop around. If you cannot do price comparison, then there really is no effect on prices of competition. Firms will compete in other ways, for example, by making themselves more accessible, or limiting access to competitors. Look, the likely thing that is happening is they get a ride to the nearest local dealership, and take whatever loan package they're offering. And if they are doing that, its probably some shady corner dealership anyway.

rufus_foreman 6y ago
>> Having a low barrier to entry is not sufficient for there to be real competition between those in the market. Why? Well, for one thing, subprime borrowers buying cars are probably limited in their ability to shop around Everybody's got a phone. And everybody can ask around, places get reputations. If you offer significantly better rates than the competition, you will get a good reputation. >> Look, the likely thing that is happening is they get a ride to the nearest local dealership, and take whatever loan package they're offering That's not what I did when I was poor, and it isn't what the other poor people I knew did.